Human beings are extremely social creatures and the term social networking which we often tie to the electronic world of blogs, Facebook and Twitter is really just an extension of what humans did before the age of computers and interconnected devices. The difference between today's social interaction and those of the past is we can now measure and manage the process and leverage the interactions of the networks to help promote brands.

There is more of course as the efficiency of electronic communications means we don't need to use a telephone or pencil and paper to communicate and moreover people can reach entire groups with the minimal effort related to a simple tweet or status post.

People often turn to their friends and others they trust for opinions because they are hit with so much branding that they aren't sure which phone is best or which car has the softest ride. And of course no one person can be an expert on everything and we all have a friend who knows the best place to buy stone for the new bathroom or carpet for the hallways, etc. And as this purchase-related interaction moves from the real to the virtual world, the intersection between social networking and corporate interests will need to be leveraged to maximize sales, service and customer loyalty.

To give added perspective I interviewed Ran Shaul, Co-founder of Pursway a company focusing on social influence and specifically allowing companies to identify, measure, and impact how opinion leaders within their customer base shape their followers' purchasing decisions. Formerly known as Datanetis, they recently received a $6 million investment to help expand their operations.

Here is our interview:

How does social influence help or hurt sales?

Examining the purchase decisions of almost 20,000 consumers in five industries globally, McKinsey concluded that in the active consideration stage of buying, "consumer-driven marketing activities, such as Internet reviews and word-of-mouth recommendations from friends and family," are twice as important as company-driven marketing. Another study by eMarketer shows that over 70% of purchase decisions are influenced by people we know and trust.

How have you seen social influence alter sales in the telco market?

Working with some of the leading telco operators, Pursway has analyzed the behavior over 100 million subscribers. Based on detailed analysis of subscriber transactions, we can clearly see that for each operator, there is a group of 7-15% of the subscriber base that directly influence the purchase behavior of their friends, family members, and colleagues. Each one of these influencers may alter the decisions of 3-4 other people when it comes to using a new services (e.g. data, apps) or handset, and as many as 4-5 followers when it comes to a decision to move to another carrier (churn).

How can influencers and followers be leveraged to boost a company's bottom line?

Operators that are able to harness the power of the influencers and turn them into advocates for their companies can see a significant boost in the success of their marketing efforts, in the order of 5-10x compared to their return on marketing today. While operators we work with are reluctant to share any specific results for obvious competitive reasons, generally speaking operators can expect results to the tune of:

7-15% churn reduction

10-20% increase in data services use

4-9% ARPU increase

What social media pitfalls should companies avoid?

The biggest pitfall is equating social media with social influence. It's easy to understand why companies fall into this trap given all the hype around social media. We did the same when we first started the company. We started analyzing social media data in hope to find the influencers. The first issue we came across was that even people that were active participants in online social media were still doing most of their important social interactions offline, so it was difficult to get enough data for any large scale analysis. The other issue we quickly realized is the considerable gap between what people say (which is what you see in social media) and what they do. By the end of day, operators are interested in social behavior that translates to business metrics such as revenues and churn, not tweets and blog posts. There is very little data that allows operators to connect the dots between these metrics and what you can see in a social media sites and do it in a scalable and cost-effective manner.

What is the one thing all companies should be doing when it comes to social media?

The first thing that companies need to realize is that ignoring the social context in which their customers operate is a recipe for failure. However, to really connect to their customers' social context and to make the most out of their investment in social marketing, companies must look beyond social media and examine how they can leverage social influence on a broader scale. The good news for these companies is that the key to unlocking the potential of social influence is in the customer transaction data they already have. But to gain the insight into the social connections and social behavior of influencers and followers, they need to analyze this data in a completely different way than they do to today.

Human beings are extremely social creatures and the term social networking which we often tie to the electronic world of blogs, Facebook and Twitter is really just an extension of what humans did before the age of computers and interconnected devices. The difference between today's social interaction and those of the past is we can now measure and manage the process and leverage the interactions of the networks to help promote brands.

\n

There is more of course as the efficiency of electronic communications means we don't need to use a telephone or pencil and paper to communicate and moreover people can reach entire groups with the minimal effort related to a simple tweet or status post.

\n

People often turn to their friends and others they trust for opinions because they are hit with so much branding that they aren't sure which phone is best or which car has the softest ride. And of course no one person can be an expert on everything and we all have a friend who knows the best place to buy stone for the new bathroom or carpet for the hallways, etc. And as this purchase-related interaction moves from the real to the virtual world, the intersection between social networking and corporate interests will need to be leveraged to maximize sales, service and customer loyalty.

\n

To give added perspective I interviewed Ran Shaul, Co-founder of Pursway a company focusing on social influence and specifically allowing companies to identify, measure, and impact how opinion leaders within their customer base shape their followers' purchasing decisions. Formerly known as Datanetis, they recently received a \$6 million investment to help expand their operations.

\n

Here is our interview:

\n

How does social influence help or hurt sales?

\n

Examining the purchase decisions of almost 20,000 consumers in five industries globally, McKinsey concluded that in the active consideration stage of buying, \"consumer-driven marketing activities, such as Internet reviews and word-of-mouth recommendations from friends and family,\" are twice as important as company-driven marketing. Another study by eMarketer shows that over 70% of purchase decisions are influenced by people we know and trust.

\n

How have you seen social influence alter sales in the telco market?

\n

Working with some of the leading telco operators, Pursway has analyzed the behavior over 100 million subscribers. Based on detailed analysis of subscriber transactions, we can clearly see that for each operator, there is a group of 7-15% of the subscriber base that directly influence the purchase behavior of their friends, family members, and colleagues. Each one of these influencers may alter the decisions of 3-4 other people when it comes to using a new services (e.g. data, apps) or handset, and as many as 4-5 followers when it comes to a decision to move to another carrier (churn).

\n

How can influencers and followers be leveraged to boost a company's bottom line?

\n

Operators that are able to harness the power of the influencers and turn them into advocates for their companies can see a significant boost in the success of their marketing efforts, in the order of 5-10x compared to their return on marketing today. While operators we work with are reluctant to share any specific results for obvious competitive reasons, generally speaking operators can expect results to the tune of:

\n

\n

7-15% churn reduction

\n

10-20% increase in data services use

\n

4-9% ARPU increase

\n

\n

What social media pitfalls should companies avoid?

\n

The biggest pitfall is equating social media with social influence. It's easy to understand why companies fall into this trap given all the hype around social media. We did the same when we first started the company. We started analyzing social media data in hope to find the influencers. The first issue we came across was that even people that were active participants in online social media were still doing most of their important social interactions offline, so it was difficult to get enough data for any large scale analysis. The other issue we quickly realized is the considerable gap between what people say (which is what you see in social media) and what they do. By the end of day, operators are interested in social behavior that translates to business metrics such as revenues and churn, not tweets and blog posts. There is very little data that allows operators to connect the dots between these metrics and what you can see in a social media sites and do it in a scalable and cost-effective manner.

\n

What is the one thing all companies should be doing when it comes to social media?

\n

The first thing that companies need to realize is that ignoring the social context in which their customers operate is a recipe for failure. However, to really connect to their customers' social context and to make the most out of their investment in social marketing, companies must look beyond social media and examine how they can leverage social influence on a broader scale. The good news for these companies is that the key to unlocking the potential of social influence is in the customer transaction data they already have. But to gain the insight into the social connections and social behavior of influencers and followers, they need to analyze this data in a completely different way than they do to today.